The Innovation and Startup Ecosystem in Cyprus

The fifth edition of Cyprus 4.0 for 2023 focuses on Cyprus’ innovation and startup ecosystem, as well as the island’s leading international tech businesses that are contributing to Cyprus’ growth as a prominent tech hub in the European Union

Cyprus has every resource required as a location for setting up headquarters, establishing a regional office such as back offices or development centres, expanding one’s business, or setting up an innovative startup. The island seeks to create the ideal environment for innovation as a platform for economic growth, with the goal of creating, attracting, and growing world-class research, talent, and technology, as well as providing opportunities for innovative ideas to grow and develop into successful startups.

The island has all the ingredients to facilitate the success of one’s technology-based business with many organisations in Cyprus offering cutting-edge capability for startups willing to set up their business in Cyprus.

Innovative research, a rapidly growing startup ecosystem, a highly educated and experienced pool of human talent and a range of incentives and development programmes and grants render Cyprus a perfect choice to start and scale companies. The strong IP Box Regime and the Cyprus Startup Visa Scheme which allows talented entrepreneurs from countries outside the EU and the European Economic Area to be granted working permission to establish startups in the country, attract world-class innovation-based ideas and successful startups. Startups and SMEs promoting entrepreneurship and innovation can also benefit from tax incentives provided by the government for those individuals investing in those companies.

Organisations such as Invest Cyprus, the national authority of the government of Cyprus, are responsible for attracting and facilitating foreign direct investment into the country while promoting the island as the ideal business and investment destination, highlighting its great potential as a growing tech hub and a dynamic financial centre within the European Union. The organisation provides hands-on support throughout the location selection process, setting up a business in Cyprus, relocation of family members and staff, facilitation of newcomers, and aftercare for existing investors.

As Cyprus fast develops into an innovation and entrepreneurial hub, and numerous organisations work together to offer constant innovation and entrepreneurship events, collaborations and discussions, non-profit organisations such as TechIsland, are accelerating the growth of technology and the innovation ecosystem in Cyprus. “Our aim is to build a globally recognised brand for Cyprus as an innovation leader and promoting the competitiveness of Cyprus as an IT Hub,” General Manager, Marios Giorgoudis said. “From local startups to international heavyweights, each member brings unique expertise and experience to the table, making our community a true force to be reckoned with.”

When it comes to the trends that are set to level up in 2024, Giorgoudis maintains that global trends in technology and AI will continue to reshape the job market. “Fields like cybersecurity, data science, data analysis are rapidly becoming the bedrock of the job market, offering a wide array of opportunities for innovation and career development,” he told Cyprus 4.0.

“For Cypriots, with the growth of the tech industry locally, this shift presents a unique chance to engage in exciting new careers within the country that did not exist before. The growing importance of these high-demand roles positions Cyprus to play a key role in the global tech landscape, driving economic growth and offering its workforce a chance to participate in the evolving world of technology.”

According to Giorgoudis, this trend underscores the importance of aligning education and training programmes with the needs of these emerging fields, “ensuring that the local talent pool is prepared to meet the demands of these future-focused professions.”

“By doing so, Cyprus can not only enhance its standing as a tech hub but also ensure long-term economic resilience and prosperity,” Giorgoudis added.

The Cyprus gaming industry has likewise been rapidly evolving, developing as an important contributor to the country’s economy and cultural landscape. The gaming community in Cyprus has grown significantly as a result of increased internet connectivity and widespread usage of smartphones and game consoles.

“Cyprus indeed offers a conducive environment for innovation companies and startups,” Valentinos Polykarpou, General Manager, Executive Director Global HR Operations and Services, Wargaming Group said. “In recent years, the influx of diverse talent and a growing entrepreneurial spirit have significantly enriched the island’s technology and innovation landscape.”

According to Polykarpou, Cyprus’ strategic geographical location provides unique market access and multicultural insights. “Coupled with its favourable tax incentives and a supportive regulatory framework, Cyprus stands out as an appealing destination for technology companies and startups.”

“However, a notable challenge is the limited local talent pool, particularly in specialised technology sectors. As a country with one of the EU’s lowest proportions of STEM graduates, Cyprus should prioritise enhancing STEM education and attracting international talent to address this shortfall,” he said.

“Moreover, while the startup ecosystem is progressing, there is a need for more structured mentorship and networking platforms to facilitate knowledge sharing and collaboration between startups and established tech firms. Further support for startups could include funding opportunities, incubator programmes, and the development of technology parks, providing necessary infrastructure and resources,” Polykarpou added.

According to Polykarpou, the gaming industry faced significant challenges in 2023, including widespread layoffs and a general contraction. “I anticipate this trend may continue into 2024, particularly in the mobile gaming sector. Various factors and decisions continue to influence mobile game publishing,” he said.

“Established franchises like ours may not feel the impact as acutely. However, launching a new high-quality mobile title now requires substantial marketing investment, potentially in the tens of millions. The current economic climate is particularly challenging for small developers, leading to an industry-wide reduction,” he told Cyprus 4.0.

“We are witnessing a situation reminiscent of what occurred in Hollywood, where a smaller number of studios focus on producing similar content within huge franchises. However, there is still potential for notable releases from independent studios. The gaming industry seems to be moving in this direction.”

Despite the challenges, Polykarpou encourages young and ambitious startups to persevere. “Breakthroughs in gaming are invaluable, both for the immense enjoyment they bring to players and for the innovation they inject into the industry.”

Whether big or small, organisations and the people who drive their success are optimistic about Cyprus’s future as an innovative technological hub. While their efforts are aimed at creating an atmosphere that fosters innovation and progress, they are also seeking to enhance the living and working conditions for highly skilled professionals and their families.